Moving out on your own certainly increases the amount of freedom you have, but also comes with the price of fiscal responsibility. Preparing to move involves research, financial planning and stockpiling some cash. Looking at apartments, thinking about possible roommates and flipping through interior decorating magazines is the fun part. But working and saving money for the transition is the better use of your time.
Create a Budget
Figuring out how much money you will need to move requires a budget. It doesn’t have to be complicated, just a simple list of how much money you earn and what your proposed expenses will be. You may not know how much everything will cost down to the penny, but you can research to get an idea of future bills. Start by writing down everything you will need each month to live. This list includes rent, food, utilities, phone and Internet, credit card payments, transportation costs (including any car payments or insurance), entertainment expenses and discretionary cash (such as the daily latte or snacks). To get a good idea of what you spend each day, save all of your receipts and bills for at least one month and add them up to help create your budget. Once you’ve understood how much money you need to live each month, you can determine how much you will need to move out.
Your apartment will likely be the largest expense in your monthly budget and will take the most consideration to estimate. While you may want to live by yourself, many people start out living with roommates to share rent and utility expenses. To compare rents in your area, look at online classifieds and check the going rates. Remember that rents are often cheaper in one part of town than the other, but you will need to consider how far away the apartment is from work or school, particularly if you rely on public transportation. Also, many rentals require a security deposit and an additional month’s rent to move in. So if the total rent is $900, the move-in cost may be an additional $900 or more. Additionally, don’t assume that you can put this amount on a credit card; most property owners require cash, money order or personal checks only.
Food, Utilities and Transportation
You may think you can live on ramen noodles and dollar burgers, but don’t underestimate food when drawing up your budget. As far as utilities, estimate these by either calling your local utility company and asking for an average monthly rate, or talk to the building manager of an apartment unit you are interested in renting. In some cases, apartments include electricity and water in the monthly rent. Additional expenses to consider include your phone bill and cable and Internet fees. Your monthly budget should also include car payments and insurance. If you do not have a car, figure in the cost of a monthly bus pass.
The final piece in your budget includes a place for entertainment expenses and other purchases. These include trips to the coffee shop, cafes and tickets for the movies or music venues. A $3 latte, when purchased every day, adds up quickly to $90 over the course of a month. In some cases that will pay for your phone bill. Take into consideration how much you “need” something as opposed to how much you enjoy living on your own, and find a way to make financial choices that support your ultimate goal.